EPFO Rules: Can you really withdraw 100% of your provident fund? Check eligibility, minimum requirements, other details

New EPFO rules: Over seven crore subscribers of the Employee Provident Fund Organisation (EPFO) will now be able to withdraw up to 100 per cent of eligible funds, including employee and employer share, according to a Labour Ministry release.

The EPFO's Central Board of Trustees (CBT) on October 13 approved simplifications and liberalised part withdrawals for users, in a meeting headed by Union Labour Minister Mansukh Mandaviya.

“The liberalisation of partial withdrawals ensures members can meet immediate financial needs without compromising their retirement savings or pension entitlements,” it stated.

Simplification of EPF partial withdrawal provisions — Key Highlights

• To enhance Ease of Living of EPF members, partial withdrawal provisions have been simplified by merging 13 complex provisions into a single, streamlined rule categorised into three types — Essential Needs (illness, education, marriage), Housing Needs and Special Circumstances.
• Now, members will be able to withdraw upto 100 per cent of the eligible balance in the Provident Fund including employee and employer share.
• Withdrawal limits have been liberalised—education withdrawals allowed up to 10 times and marriage up to five times (from existing limit of total of three partial withdrawals for marriage and education in all).
• Requirement of minimum service has been uniformly reduced to only 12 months for all partial withdrawals.
• Period for availing premature final settlement of EPF has been extended from the existing two months to 12 months and final pension withdrawal from two months to 36 months.
• Further, the release noted that the “simplification and flexibility, along with zero need for any documentation will pave the way for 100 per cent auto settlement of claims for partial withdrawal and ensure ease of living”.

What is eligible PF balance for withdrawal?

This is the amount in your EPF account that remains after keeping aside the require minimum balance. Thus, in effect, you can withdraw up to 75 per cent of your current Provident Fund balance for various needs.

What is categorised as ‘Special Circumstances’?

As per the release, while users had to earlier declare a reason for partial withdrawal — either for closure of establishment, continuous unemployment, natural calamity or outbreak of epidemic; they can now apply for funds without assigning a reason.

This is because it was observed that many claims were being rejected and led to grievances being raised.

Minimum Balance to be 25% of contribution in account

Further, the board has created a provision requiring that 25 per cent of a user's contributions be maintained as Minimum Balance at all times. Maintaining this balance allows members to “enjoy high rate of interest offered by EPFO (presently 8.25 per cent per annum) along with compounding benefits to accumulate a high value retirement corpus”.

The rationalisation given was that this step allows ease of access while ensuring a sufficient retirement corpus.

Fund managers approved for debt portfolio

The CBT has also approved four Fund Managers to manage the EPFO's debt portfolio for a period of five years. The include SBI Funds Management, HDFC AMC, Aditya Birla Sun Life AMC, and UTI AMC.

“This decision marks a significant step towards ensuring prudent management and diversification of EPFO’s investment portfolio, aimed at safeguarding and enhancing returns on members’ provident fund savings in line with the organisation’s long-term investment objective,” the statement added.